New-Home Sales Shrink
With builders burdened by costs and inventory stubbornly tight, June new-home sales shrank, 5.3 percent to 631,000, according to the Commerce Department. Inventory in June was 301,000, representing 5.7-months' supply, and the median price was $302,100.
"Uncertainty caused by tariffs and the talk of trade wars are making homebuyers more cautious, and builders are taking note of this situation," said Randy Noel, chairman of the National Association of Home Builders (NAHB), in a statement. "Not only are consumers and builders concerned about the current lumber tariffs, but also the next round of proposed tariffs on a number of goods and services."
"Though this is the lowest monthly annualized sales pace since October 2017, new-home sales for the first half of 2018 are up 6.9 percent on a year-to-date basis compared to last year," said Robert Dietz, chief economist at the NAHB. "This indicates solid demand for new-home construction."
"[The] larger-than-expected monthly dip in new-home sales does not diminish a steady string of year-over-year gains, although those year-over-year gains have steadily slowed over the first half of this year," said Aaron Terrazas, senior economist at Zillow, in a statement. "With existing-home inventory so tight for so long, and prices rising so quickly, home builders clearly are responding to a market starved for new supply and buoyed by a strong labor market.
"Despite rising costs, builders are succeeding at delivering more homes, but it remains to be seen how long they can continue what is becoming a very complicated dance, as costs march upward and rising mortgage rates gradually eat into homebuyers' affordability," Terrazas said.